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Barclays' Q4 Earnings Up on Solid IB, 2025 NII View Upbeat, Stock Dips
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Barclays (BCS - Free Report) reported fourth-quarter 2024 net income attributable to ordinary equity holders of £956 million ($1.22 billion) against a net loss of £111 million in the prior-year quarter.
Stay up-to-date with all quarterly releases: See ZacksEarnings Calendar.
Despite robust quarterly performance, Barclays shares are down more than 6% in pre-market trading. Inflation uncertainty seems to be weighing on the investor sentiments.
An increase in revenues (driven by solid investment banking [IB] performance), lower operating expenses (showing the success of cost-efficiency initiatives) and a solid balance sheet supported the results. However, the company recorded a rise in credit impairment charges in the quarter.
Barclays’s Revenues Jump, Expenses Slide
Total income was £6.96 billion ($8.92 billion), jumping 24% year over year.
Operating expenses (excluding litigation and conduct costs) of £4.24 billion ($5.43 billion) declined 10%.
The cost-to-income ratio was 66%, down from 88% in the year-ago period.
In the reported quarter, Barclays recorded credit impairment charges of £711 million ($911 million), up 29% year over year.
Pre-tax income was £1.66 billion ($2.13 billion), up substantially from the prior-year quarter.
BCS’ Balance Sheet Solid
Total assets, as of Dec. 31, 2024, were £1,518.2 billion ($1,903 billion), up 3% from the end of December 2023.
Total risk-weighted assets grew 4% from the Dec. 31, 2023, level to £358.1 billion ($448.9 billion) as of Dec. 31, 2024.
As of Dec. 31, 2024, the Common Equity Tier 1 (CET1) ratio was 13.6% compared with 13.8% as of Dec. 31, 2023.
Barclays’ 2025 Guidance
Management expects the loan loss rate to be 50-60 basis points through the cycle.
NII (excluding Barclays Investment Bank and Head Office) is expected to be approximately £12.2 billion. Of this, Barclays UK is projected to generate NII of £7.4 billion.
The cost-to-income ratio is projected to be 62%, which includes £0.5 billion of gross efficiency savings.
The CET1 ratio is expected to be 13-14%.
Barclays expects to deliver a return on tangible equity (RoTE) of 11%.
Barclays’ 2026 Guidance
The company projects a total income of £30 billion.
Operating expenses are likely to be £17 billion and the cost-to-income ratio is anticipated to be in the high 50s in percentage terms. This includes gross efficiency savings of £2 billion by 2026.
The loan loss rate is projected to be 50-60 basis points through the cycle.
The CET1 ratio is expected to be 13-14% and RoTE is estimated to be more than 12%.
Barclays Investment Bank RWAs are expected to be 50% of the Group RWAs. Further, the Impact of regulatory change on RWAs will be in line with the company’s prior guidance of £19-26 billion.
Additionally, BCS plans to return at least £10 billion of capital to shareholders between 2024 and 2026 through dividends and share buybacks, with a continued preference for buybacks.
Our View on Barclays
Given Barclays’ restructuring and business-simplification efforts, its operating efficiency is expected to improve in the quarters ahead. The company’s cost-saving efforts will likely keep aiding financials. Yet, a challenging operating backdrop is worrisome.
UBS Group AG (UBS - Free Report) reported a fourth-quarter 2024 net profit attributable to shareholders of $770 million against a net loss of $279 million in the prior-year quarter.
Results were driven by the strong performances of the Global Wealth Management, Asset Management and Investment Bank divisions. The decrease in operating expenses was another positive for UBS. However, an increase in credit loss expenses was a headwind.
Deutsche Bank (DB - Free Report) reported fourth-quarter 2024 earnings attributable to its shareholders of €106 million ($113 million), down 92% year over year.
DB’s results benefited from higher net revenues and lower provisions. Also, a strong capital position acted as a tailwind. However, a rise in expenses was an undermining factor.
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Barclays' Q4 Earnings Up on Solid IB, 2025 NII View Upbeat, Stock Dips
Barclays (BCS - Free Report) reported fourth-quarter 2024 net income attributable to ordinary equity holders of £956 million ($1.22 billion) against a net loss of £111 million in the prior-year quarter.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Despite robust quarterly performance, Barclays shares are down more than 6% in pre-market trading. Inflation uncertainty seems to be weighing on the investor sentiments.
An increase in revenues (driven by solid investment banking [IB] performance), lower operating expenses (showing the success of cost-efficiency initiatives) and a solid balance sheet supported the results. However, the company recorded a rise in credit impairment charges in the quarter.
Barclays’s Revenues Jump, Expenses Slide
Total income was £6.96 billion ($8.92 billion), jumping 24% year over year.
Operating expenses (excluding litigation and conduct costs) of £4.24 billion ($5.43 billion) declined 10%.
The cost-to-income ratio was 66%, down from 88% in the year-ago period.
In the reported quarter, Barclays recorded credit impairment charges of £711 million ($911 million), up 29% year over year.
Pre-tax income was £1.66 billion ($2.13 billion), up substantially from the prior-year quarter.
BCS’ Balance Sheet Solid
Total assets, as of Dec. 31, 2024, were £1,518.2 billion ($1,903 billion), up 3% from the end of December 2023.
Total risk-weighted assets grew 4% from the Dec. 31, 2023, level to £358.1 billion ($448.9 billion) as of Dec. 31, 2024.
As of Dec. 31, 2024, the Common Equity Tier 1 (CET1) ratio was 13.6% compared with 13.8% as of Dec. 31, 2023.
Barclays’ 2025 Guidance
Management expects the loan loss rate to be 50-60 basis points through the cycle.
NII (excluding Barclays Investment Bank and Head Office) is expected to be approximately £12.2 billion. Of this, Barclays UK is projected to generate NII of £7.4 billion.
The cost-to-income ratio is projected to be 62%, which includes £0.5 billion of gross efficiency savings.
The CET1 ratio is expected to be 13-14%.
Barclays expects to deliver a return on tangible equity (RoTE) of 11%.
Barclays’ 2026 Guidance
The company projects a total income of £30 billion.
Operating expenses are likely to be £17 billion and the cost-to-income ratio is anticipated to be in the high 50s in percentage terms. This includes gross efficiency savings of £2 billion by 2026.
The loan loss rate is projected to be 50-60 basis points through the cycle.
The CET1 ratio is expected to be 13-14% and RoTE is estimated to be more than 12%.
Barclays Investment Bank RWAs are expected to be 50% of the Group RWAs. Further, the Impact of regulatory change on RWAs will be in line with the company’s prior guidance of £19-26 billion.
Additionally, BCS plans to return at least £10 billion of capital to shareholders between 2024 and 2026 through dividends and share buybacks, with a continued preference for buybacks.
Our View on Barclays
Given Barclays’ restructuring and business-simplification efforts, its operating efficiency is expected to improve in the quarters ahead. The company’s cost-saving efforts will likely keep aiding financials. Yet, a challenging operating backdrop is worrisome.
Barclays PLC Price, Consensus and EPS Surprise
Barclays PLC price-consensus-eps-surprise-chart | Barclays PLC Quote
Currently, Barclays carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Barclays’ Peers
UBS Group AG (UBS - Free Report) reported a fourth-quarter 2024 net profit attributable to shareholders of $770 million against a net loss of $279 million in the prior-year quarter.
Results were driven by the strong performances of the Global Wealth Management, Asset Management and Investment Bank divisions. The decrease in operating expenses was another positive for UBS. However, an increase in credit loss expenses was a headwind.
Deutsche Bank (DB - Free Report) reported fourth-quarter 2024 earnings attributable to its shareholders of €106 million ($113 million), down 92% year over year.
DB’s results benefited from higher net revenues and lower provisions. Also, a strong capital position acted as a tailwind. However, a rise in expenses was an undermining factor.